How to Avoid Common Franchise Mistakes

Beth Haselhorst: Nearly nine hundred new franchise concepts begin franchising in United States in the past three years according to 2007 research report by the International franchise association. It’s obviously a popular way to expand the business but it’s not for every enterprise or entrepreneur. We’re here today with Dick Rennick, former chairman of the International Franchise Association with 30 years of experience in the franchising sector. He's an award winning franchisor, founding a 360 unit franchise system and he's recognized as one of the leading experts on franchising. Welcome to sbtv.com Dick. Dick Rennick: Well, thank you, I'm happy to be here. Beth Haselhorst: When looking into expanding into a franchise what are some the most common mistakes companies are making? Dick Rennick: Well, first of all many people think that they have a great concept and they really need to get some outside counsel from the companies like me but they can find it going to franchise.org. They need to make sure that they’ve got something that is truly franchisable and the second thing is they got to make sure they have the capital to do it. They can't just be half pregnant so to speak. You need they are you on, if you got the money to do it, then you got to make the investment and to get into franchising depending upon your concept you may spend anywhere from a low below hundred thousands to maybe several hundred thousand. And that depends upon the franchise concept if you're mobile base, service base, food base. There's a huge spread so you got to be able to figure that out by talking to some experts in the field. Beth Haselhorst: And what other ways have you seen franchising mistakes really cost successful companies in branches? Dick Rennick: Well, they didn’t have the right people managing the concept. They didn’t have the right people helping them to grow up. They didn’t belong to trade associations like the International Franchise Association or the National Restaurant Association and other associations that help people with their business. And they didn’t ask for help. Usually when you're out there in the franchise community and you're going to go on to franchising most all franchise companies are all willing to help from the franchises to the franchise all. So, you can't do enough research. Make sure that you make the right choices going in. Beth Haselhorst: Do the work up front and it will pay off in the end. Dick Rennick: Exactly. Beth Haselhorst: All right, once you are a franchiser what are some of early mistakes, some of the early mistake you see people make? Dick Rennick: Well, they don’t get their franchise sees involve in some of the suggested decision making and I'm not talking about decision making that look we’re going to from green to black, we’re going to go from red to white or we’re going to do change wealthy from this to that, we’re going to change everything in our franchise document. You need to form a franchise the advisory counsel within the first few franchise and so then everybody needs to belong to this franchise the advisory counsel. And you need to have meetings from time to time with this franchises, you need to get feedback from the franchises and what’s you're doing right, what's you're doing wrong, what’s working, what isn't. The beginning faces of your franchise system is very important because as your system begins to grow 15, 20, 50, a 100, 150, if you make those decisions in the beginning as much as you should to change it when you’ve got 15 or 20 franchises and when you have 150 or 200. So get your franchise is involve with the Gate. Many franchisors are not aware that they should do that in beginning. Beth Haselhorst: Right. What types of people typically what a franchise or what makes one want to franchise their business? Dick Rennick: That’s a very good question. In most cases is the entrepreneurial spirit, it’s the drive to want to grow something that they’d really enjoyed over the last several years. They seen it grow, they want to expand it, but in expanding it isn't so much about the money it’s getting the brand out there, it’s--I got this great idea, I got this great concept all be at foods or service or mobile, whatever it is I know that I can help people in another cities, I know I can help in another states. So the best way to replicate that is through franchising. And most important thing in replicating it is get good advice at the gate and if they get that proper at the gate, they have nowhere to go but up. So it isn't about the money it’s about the entrepreneurial spirit. Beth Haselhorst: And where again can I go for that advice? Dick Rennick: They can go to www.franchise.org, they can go in to that site and they can look for franchise business consultants like they can look for franchise attorneys, they can look at all kinds of different thing and don’t be afraid to ask. You're going to find when people are thinking about franchising they need to attend some franchising shows, they need to attend the convention or to that the IFA puts on and that way they begin to learn. There are classes you can take online in franchising. Franchise Association has educational foundation where we do actual training online that helps people make decisions about franchising and gives you some ideas to think about before you're taking that next step. Beth Haselhorst: So it’s only going to benefit you if you want to grow that company? Dick Rennick: It’s going to benefit you and the franchises that have decided to come on with you and the family begins to grow. Beth Haselhorst: Well, great. Thank you very much for your time today Dick, I appreciate it. Look for other segment on franchising in small business from Dick here on sbtv.com. You can also learn more about Dick Rennick and his company by going to www.teamrennick.com. This is sbtv.com, Small Business Is Our Only Business.